Posted
by
Soulskill
on Wednesday September 02, 2009 @07:40AM
from the time-to-pay-the-piper dept.

mikesd81 tips news that a California jury has found two web hosting companies liable for "contributing to trademark and copyright infringement" after hosting web sites that sold counterfeit Louis Vuitton items. Both companies are owned by the same man, Steven Chen, and are being ordered to pay $32 million in fines. A similar judgment for $61 million went against eBay last year for facilitating the sale of counterfeit Louis Vuitton merchandise.
"The US District Court for the Northern District of California is expected to issue a permanent injunction banning the internet service providers from hosting Web sites that selling fake Louis Vuitton goods in the future, the company said. Attorneys for the luxury goods maker said in a statement that the case is the first successful application on the internet of the theory of contributory liability for trademark infringement. Under this theory, companies that know, or should know, that they are enabling illegal activities have an obligation to remedy the situation. Entities that fail to do so, as Louis Vuitton alleged in this case, can be held legally responsible for contributing to the illegal activities."

Yeah but isn't this setting a bad precedent? This basically says webhosts are responsible for their clients content. Sure that may seem fine and dandy, but for large webhosts, verifying that all your clients have legal and legitimate content and goods posted would be a nightmare.

Hosts are under no obligation to actively investigate their content. In this case the hosts were informed about illegal content and took no action against it. This wasn't a case of them not spotting 1 website out of 1000 doing illegal activity, it was a case of them knowing about the activity but not caring.

Frequently, sites that are doing nothing wrong whatsoever are targeted by threatening their provider or at least making bogus IP claims to the provider. Shall we make the rule take down first, ask questions later? How will that play when a whistle blower's site is taken down for IP violations when Badco claims that the fact that they're dirty cheating scum is their valuable IP?

If I tell your bank that you're a fraud artist, shall they freeze your account and in the process destroy your business? Should they have any duty whatsoever to determine where the money comes from? If banks were held liable for every illegal transaction they unwittingly contribute to, they'd have been out of business a long time ago.

It seems to me that law enforcement and the courts are the ones who are supposed to decide when someone is committing a crime. Then the court should produce a takedown order. Naturally, an ISP ignoring a valid court order would be a very different matter, but until this went to court, all they had was a few letters purporting to be from a foreign company alleging trademark infringement.

If I tell your bank that you're a fraud artist, shall they freeze your account and in the process destroy your business? Should they have any duty whatsoever to determine where the money comes from? If banks were held liable for every illegal transaction they unwittingly contribute to, they'd have been out of business a long time ago.

Never worked for a bank, have you? ALL employees (even those of us who had no contact with customers or money) are required to take money laundering training.

The short version goes something like this (for US banks, Europe has similar requirements): If a transaction is over a certain amount, it gets reported. If you do a bunch of small transactions around the limit to even appear to avoid the reporting, you get reported. If a bank fails to report it, they're liable for fines and penalties. You, as the em

NO. They are required to REPORT certain transactions that may or may not be evidence of fraud. Then the courts tell them if they should freeze the account. They do not get nailed to the wall as accomplices or co-conspirators and they are not required to decide on their own initiative to freeze an account.

A bank being ordered by the government to freeze an account is way different than a hosting company being told by a manufacturer to remove a site which allegedly sells counterfeit merchandise.

Government orders are legally presumed correct. If the gov't orders one to do something one knows one has an obligation. That doesn't apply for private companies or individuals. If you think it does, I hereby order you to send me $10000.

You making the same incorrect assumption that the judge did in this case. Manufacturer has no idea if bags are fake until they buy and test them.

Low price alone does not mean that merchandise is fake. Some items might have been bought on clearance at outlets (which already have pretty good discounts), while others could have been "taken" out of back door in the factory (which alone does not make product a "fake").

On eBay, of instance, luxury manufacturers try to control prices of their products by sending take down notices to everyone who tries to undercut their retail prices. First Sale Doctrine [wikipedia.org] does not seem to apply to people with deep pockets.

The hosting company received emails CLAIMING to be from the manufacturer. They most likely also received a few dozen emails from "Egg Bank", "Bank of America", "Your Bank", and even "support@their-own-domain" that day. Not to mention a few dozen barristers informing them of untold riches that have been willed to them. They may have even received a grant notification from Bill Gates.

I've received personal visits from repo-men claiming that someone I've never heard of lived in my house and had a car I've never seen parked somewhere. Considering that I've lived here since it was built, I doubt their claims but they were quite sincere in their belief.

Using your example, the bank would, or should ask you questions about the alleged fraud. When they find out you're a kook, they hang up on you.

And what if I'm a really convincing kook or a really unconvincing legitimate complainant? Are they doomed to a multi-million dollar loss if they guess wrong? Are you doomed to a loss if they guess wrong?

Neither the bank nor the ISP are empowered to perform criminal investigation, so there's only so much they can do. All they know for a fact is that some guy on the phone says you're a fraud and you say you're not.

Not all that much. ISPs are still not courts legally empowered to decide matters of law for 3rd party disputes. Registered mail with a working reply address would have verified that the complainant was actually Vuitton but wouldn't have verified the correctness of their claim. Their fame doesn't make them infallible.

I might have had a bit more sympathy for the jury's decision but still wouldn't fully agree.

My feelings would be quite different if Vuitton had sued the OWNERS of the website (the ISP's client) and a resulting court ordered take-down had been ignored by the ISP, or at least if Vuitton had then furnished an authenticatable judgment that the client was in fact infringing, but that's nothing like what happened.

I would argue that the COURT and perhaps the law is wrong to consider policing customer's trademark violations a duty of the ISP in the first place. Law is not necessarily equal to just, correct, or ethical.

Hosts are under no obligation to actively investigate their content. In this case the hosts were informed about illegal content and took no action against it. This wasn't a case of them not spotting 1 website out of 1000 doing illegal activity, it was a case of them knowing about the activity but not caring.

Excellent. Now I can sue Qwest and AT&T when telemarketers call me to sell fradulent items. After all, they are also "aiding" in this criminal enterprise...

This is a Renter's issue. If I lease out an office space to people whom I know are dealing cocaine, I get put in prison too unless I notify authorities and cooperate with the investigation. The host being penalized for knowingly hosting a website dealing illegally in IP is analogous. What's the hubbub about? Seems reasonable to me.

No one suggested the host had to take-down the site, the host probably should have notified the IP holder and worked with authorities. It's not the host's responsibility to kick his leasees out of his office space, in fact the host has a legal obligation to not interfere with a leasee's space unless invited in during the terms of the lease. The IP holder has no authority to demand a takedown, only a judge does, but you can cooperate to get to the bottom of the issue instead of being an antisocial asshat that ignores everyone. A simple call a lawyer "I've been notified that a website I host is dealing in illegal items and I'm calling to cooperate with any investigations currently underway or that you will initiate." Not so hard.

If you receive a takedown notice, take it to a lawyer and say you want to cooperate but need to validate the notice, have your lawyer contact the author of the takedown to say you're cooperating but need more information such as patent information or copyright filings. A takedown notice is not a judicial document, you need a judge for that, and if you initiate the judicial process through cooperation no judge will fine you excessively if you unwittingly facilitated the activity. Don't get so paranoid. It's like the internet is filled with twelve year-olds that put MP3s up on their Geocities page to look like a 'cool' technogangsta and don't know what their rights are or how to be a good responsible citizen.

Yes it rather is setting a nasty precedent. Either these webhosts will filter the heck out of their content and lose out to some other site that doesn't [eg. the pirate bay] or copyright claims are nigh unenforceable for small acts of copyright infringement. Unfortunately the reality is likely a combination of both... Sites will be liable for others' content and fail miserably to both stay afloat and filter their conetent.. *And* piracy/infringement will continue in the spirit of the internet routing aro

"Yes it rather is setting a nasty precedent. Either these webhosts will filter the heck out of their content and lose out to some other site that doesn't [eg. the pirate bay] or copyright claims are nigh unenforceable for small acts of copyright infringement."

The case in TFA is about trademark infringement. There's already plenty of precedent in the US for going after webhosts who knowingly allow their users to infringe copyright. This is why the US-based P2P services (remember Aimster?) and the big US-ba

some [including myself] would argue that the government's powers over commerce are *too exansive* often these powers lead to violating other rights [no knock raids, warrent-less surveillance etc...] The drug war and draconian copyright laws as examples.. The government has given its self the power to ruin peoples' lives to protect intellectual property and prosecute non-violent drug use. There is something very un-nerving about it all.

So...if I sell Cisco gear, and it turns out that I wind up with counterfeit Cisco gear, they could argue that because I know what real Cisco gear looks like I should be able to identify any counterfeit Cisco gear. Then Cisco can come in and slap me for some unholy sum for "should have known". I wonder how much they lose in sales due to cheap counterfit equipment. I mean, arguably, someone buying a cheap counterfit is not likely to pay the full price for a real one, so it is pretty difficult to call all of it lost sales. So...now there is an active disincentive to protect your goods from counterfit. Instead of worrying about counterfit, they can just go sue the shit out of anyone selling counterfit to people who probably wouldn't have purchased an original anyways. Thus turning a bunch of non-sales into revenue. This is just fucking brilliant.

They would have to prove you knew (which for convincing fakes would be incredibly hard to do).

However if, Cisco informed you that you were selling fakes and you continued selling what you knew to be fakes, are you seriously suggesting you shouldn't then be liable for selling counterfeit goods?

Ignorance is still a valid defence, however if you RTFA you will see the web hosts were informed they were hosting websites selling illegal goods and did nothing to remedy this. The sellers made money selling dodgy goods, the web hosts made money directly from the illegal activity and enabled it to continue.

However if, Cisco informed you that you were selling fakes and you continued selling what you knew to be fakes, are you seriously suggesting you shouldn't then be liable for selling counterfeit goods?

A lot of companies claim a lot of things that don't turn out to be true. Sometimes it's an honest mistake, sometimes it's an outright lie. If the RIAA claims that reselling used media is illegal, do you necessarily believe it? They once claimed that a downloadable file, usher.mp3 was a copyright violation and demanded that it be taken down. Turns out that Professor Usher took exception to their claim of copyright over his recorded lecture. Should his free speech have been effectively denied on the RIAA's say so?

Supposedly, in matters of law, the COURTS are supposed to decide who is telling the truth, not businesses. In a world where the law is sane, Vuitton would have taken the actual owner of the website to court, the court would decide if there was a trademark violation, and then would issue a take-down order to the ISP if it found that there was cause.

What the ISP knew is that someone claiming to represent Vuitton claimed that their customer was selling counterfeit goods and that it was a trademark violation. It did not know if that person actually represented Vuitton, if the goods were counterfeit or if that was a trademark violation. In this case, those claims turned out to be true. It could have as easily been a competing website that wanted to sweep the competition away. That's the sort of thing that courts are supposed to decide.

From TFA, "They further said that Chen and his companies had been informed of the activity by Louis Vuitton but still refused to implement a policy for removing the offending sites, which was their responsibility." This proves the defendant and his attorneys were idiots - they had been informed that the trademark was being infringed. They can't pretend that they didn't know the products were counterfeit and illegal.

I can't see how that DMCA defense applies to trademark, or how DMCA applies to real world p

I realize now that my example was incorrect. I would be expected to take down a site one of my servers hosted based on being informed by Cisco (not the authorities) that the site was selling counterfeit goods. So it is even more insane! So...if I don't like my competition, I call their web host and tell them if you don't take down the entire site right now then I will sue you for millions because I said they are doing something wrong. Brilliant!

Like AC above you, you seem to assume that the actual owner of a trademark doesn't know his own goods, and/or his own supply chain. I think that if one receives such a notice, the recipient has an obligation to examine the claims, at the least. If such examination seems to have any merit, then compliance with the notice only makes sense.

If, on the other hand, the claims seem to have no validity, handing it off to a lawyer might make sense.

Like AC above you, you seem to assume that the actual owner of a trademark doesn't know his own goods, and/or his own supply chain. I think that if one receives such a notice, the recipient has an obligation to examine the claims, at the least. If such examination seems to have any merit, then compliance with the notice only makes sense.

The actual owner of a trademark may NOT know his own supply chain. Furthermore, even if he does, he may lie about it. For instance, suppose a store which had a lot of Vuit

Explain to me how any of this is the responsibility of the web hosting company. This is between the guy selling the goods being claimed as counterfeit and the guy claiming they are counterfeit. This just opens a big damned door for all manner of stupid liability for web hosting companies. The ONLY reason for this kind of bullshit excuse is to pick the pockets of those who you think have the most money and not who has the most responsibility.

Via this posting, I am officially informing Sourceforge that editor kdawson has been using the site "slashdot.org" to send sensitive information to terrorist cells around the world via bogus article summaries.

See? Now that I've informed Sourceforge, it's incumbent upon them to take Slashdot down or suffer the consequences.

The huge difference is that you would be acting in good faith. Steven Chen was not.

The more I read about the case and about his businesses, it's clearly not a case of "innocent webhost caught in the crossfire." It's more like "entrepreneur sees market in providing hosting to companies selling counterfeit goods, profits from it, gets caught." Before he was in this business, he catered to spammers.

You need to dig a bit (it's mentioned in the seventh paragraph of the linked article, with a more detailed discussion on the second page), but basically the ISP in question failed to take action to shut down the hosted sites despite repeated takedown notices from Louis Vuitton. The only real precedent that this sets if you ask me is a very positive one in that if your "abuse@" email is a blackhole then you had better have extremely good liability cover and/or be very hard to reach to avoid being served with lawsuits.

From the ISPs viewpoint, someone purporting to represent Louis Vuitton sent several notices claiming that their customer was violating trademark law. A lot of people and companies claim a lot of things all the time. Some true, some not. The one thing that is consistent in all of those claims is that having people believe them is good for their profits.

Having dealt with some particularly aggressive corporate and legislative senders of take down notices while working for an ISP, the standard form basically boils down to "Take this down, now!" where "now" is usually specified as a deliberately panic inducing number of hours. That statement will usually be backed up with another one stating that making you, as the ISP, will be held jointly liable if you don't comply within the stated time frame, which is probably why the ISPs concerned here came so unstuck.

I agree that there is some ability to possibly verify the origin. Now would you care to suggest how (short of creating their own court system) they should determine if the company is correct in their allegations?

Designers HAVE been known to work hard to kill off legitimate clearance/firesale and second hand sales. Companies in general have been known to make mistakes.

They further said that Chen and his companies had been informed of the activity by Louis Vuitton but still refused to implement a policy for removing the offending sites, which was their responsibility.

If true, then they got it coming their way. You do not willingly ignore that one of your customer do illegal activity when it has been reported to you.In addition:Under existing precedent (outside of the Internet realm) a plaintiff seeking to prove contributory trademark infringement needs to prove that a defendant intentionally and knowingly enabled another to infringe a trademark, Johnson said. In this case, the jury appears to have been convinced by the evidence presented by Louis Vuitton that the Web hosting companies had clear knowledge of the infringing activity, he said.

They further said that Chen and his companies had been informed of the activity by Louis Vuitton but still refused to implement a policy for removing the offending sites, which was their responsibility.

So, I'm an ISP, and I host someone who runs a second-hand store. They sell legitimate "Louis Vuitton" crap, but at prices well below retail.

Louis Vuitton "informs" me that the material is counterfeit. I'm supposed to verify this how?

They further said that Chen and his companies had been informed of the activity by Louis Vuitton but still refused to implement a policy for removing the offending sites, which was their responsibility.

So, I'm an ISP, and I host someone who runs a second-hand store. They sell legitimate "Louis Vuitton" crap, but at prices well below retail.

Louis Vuitton "informs" me that the material is counterfeit. I'm supposed to verify this how?

Since when did ISPs become the gatekeeper of what is and isn't legal?

Maybe it depends on exactly how they refused to act. If they simply ignored the notices, then I'd say it's their own fault for getting in trouble. The obviously smart thing to do would be to ask their lawyer about the notices and either agree to remove the illegal sites or respond with an explanation of why they won't remove the sites, plus an addendum with their lawyer's contact information.

So, I'm an ISP, and I host someone who runs a second-hand store. They sell legitimate "Louis Vuitton" crap, but at prices well below retail.

Louis Vuitton "informs" me that the material is counterfeit. I'm supposed to verify this how?

Look, it's simple enough. Louis Vuitton has big pockets and can sue you for millions of dollars for trademark infringement. The secondhand store probably doesn't have enough to pay a lawyer, and at worst, they can sue you for thousands of dollars for breach of contract if you

Can we please stop making reference to the Digital Millenium Copyright Act in this discussion? The case in point concerns trademark infringement. The DMCA does not apply to this.

And for all those who say, "oh, but what if I get a phony notice," how hard is it to verify that someone is a licensed Louis Vuitton distributor? I'd agree that simply looking at the site may not be sufficient to determine whether the hosting client is engaged in trademark infringement, but the site's owner should at least be able to demonstrate that he or she is a licensed distributor.

As I mentioned in another posting, unlicensed distributors would need to obtain legitimate stock from somewhere. I presume wholesalers in these items know who is a legitimate retailer and who is not. If someone is dealing in legitimate licensed goods, they'd have to buy them at retail somewhere which significantly reduces the available profit margins from undercutting the manufacturer's preferred retail price. I suppose there could be arbitrage opportunities from buying at retail in one country and selling in another if prices or exchange rates are sufficiently out of whack, but I doubt that's a very common practice. Counterfeiting seems a much more profitable venture.

While price arbitrage is used (generally for what are called gray market goods); resellers can also buy from legitimate sellers at below retail. The store may want to order more to get a bigger discount and offload the excess to someone else at a discount because they can't sell or carry the finance costs for the entire order.

If true, then they got it coming their way. You do not willingly ignore that one of your customer do illegal activity when it has been reported to you.

In my experience (five years in the abuse department of a top-five US ISP), this is exactly what we did when people complained about web sites we hosted. Maybe "ignore" isn't the right word, but we definitely did not get involved in an issue between two third parties.

Our standard procedure for complaints of this sort was to instruct the complainant to contact

How long until we see a mass movement of hosting facilities to other states and countries?
This is really scary. I don't mind the fact that hosting facilities are now liable a lot more than before, but the court just _forced_ hosting providers to become judges of who is in breach or not of copyright.
No sane hosting provider will ever protect its customer from for instance the laywers of MS. Practically any content you have can, one way or the other, be twisted into a copyright infringement by a clever lawyer. You can be shut down at any time without any chance to protect yourself.
Yikes!

No, the court just enforced the DMCA's take down provisions that is all. Seriously, quit blowing this so out of proportion. I hate the DMCA as much as anyone else here, but it is repealed or we get sane judges to smack it down, we're stuck with it.

There needs to be a new law that operates similar to the DMCA safe harbor and take-down notice system works for copyrights. If Louis Vitton thinks that someone is selling a fake Louis Vitton bag on, say, eBay, they would send eBay a take down notice alleging (under penalty of perjury) trademark/trade dress infringement. eBay then takes down the auction when notified (and in doing so is given safe harbor from any infringement connected with the auction). And just like the DMCA take-down notice system, if the take-down is baseless (i.e. no violation has taken place), the item can be re-listed (or the information can be re-posted or whatever). And just like the DMCA, when you file a counter claim, you are alleging (under penalty of perjury) that no violation has taken place.

sites get protection from being sued for allowing items/content/etc that violate someones IP to be listed/sold/posted/etcCompanies who's IP is being violated have a simple way to get infringing content/auctions/etc taken down (but only if its actually infringing)And those who are selling legitimate items that DON'T violate someone else's IP (such as a genuine Louis Vitton bag) are free to go on selling without the risk of having their legit auction pulled.

The DMCA Copyright safe harbor protection has something similar to this. The problem is that no (or very few) of the webhosts follow through on the 2nd part, in that most web hosts don't give an opportunity for their clients to sign an affidavit of legitimacy.

When I ran a very small web hosting company a few years ago, i'd occasionally receive a DMCA takedown notice (all of them via email, typically from an anonymous email service...hotmail, gmail, etc). My response to those was to send a reply asking the alleged content owner to provide a signed statement where they swore, under penalty of perjury, that the content they were asking to be removed was in fact their own copyright. I also required their full name, address, and real-world contact information. I gave them my mailing address and my fax number to provide the requested signed documents.

Not ONE of them ever followed through with the requested information. I received about 15-20 of them over the 4 years I did hosting. I only ever received one reply to my request for more information, and that was an email saying that they would get back to me.

Change this to "the accusing company would get a court order for a take down notice".
The problem is that take-down notices coming from companies should have no legal weight. Even those coming from a company's lawyer should have no weight until a court/judge decides there is enough evidence to warrant one.
Getting a take down notice SHOULD require a procedure similar to a search warrant. A judge should have to sign off that a legal infraction has been made before the take-down notice is issued.
However

What you are suggesting is that the defendant is guilty until proven innocent. The accusation alone is enough to halt their business and take down their site. This should only happen if a court determines that there is a violation.

Also, perjury doesn't matter at all here - if someone is alleging a copyright infringement, then that needs to be investigated. Both the plaintiff and defendant can believe that they are in the right, and make claims in line with this, but if they're wrong, it's not perjury.

Seems that now anyone who provides a service can be held liable for illegal activities from its users.

You know, it's unfeasible to keep control of user content. An automated system can only detect so much, and may block legitimate content. Having employees responsible of verifying the user content would cause delay and extra costs to the service provider. Even so, it would still be possible to ignore these measures by requiring authentication.

If you read the entire article, you would have noticed that the hosting company was notified on several occasions and did not comply with the requests. To me, that is a blatant violation of any number of rules, and I have no sympathy for them.

I am no fan of the DMCA, or any of the related think of the children laws, but in this case, the hosting provider screwed up.

On the other hand, I can also see LV going after people selling legit LV products below the cost that LV thinks those products should be sold at... That would be abuse of the laws, but I doubt it would stop them.

However, the notifications came from the company, not from a court - so they bear no legal weight. Following the logic that this is acceptable, any company can cry foul and issue a take-down notice. Is the hosting provider required to remove the offending material regardless of if it is proven - or not - of infringement? This is paramount to "guilty until proven otherwise" - not something we promote in the U.S. - or it should not be.

While they bear no legal weight, you see the result, the company will just sue the provider.

The correct choice would have been for the web hosting company to atleast acknowledge receipt, and request that they provide proof, a court order, any response really. In this case, they just ignored LV, that was not the correct action.

On the other hand, I can also see LV going after people selling legit LV products below the cost that LV thinks those products should be sold at.

I think that would be very difficult. LV products are licensed, so unlicensed competitors can't just ask a wholesaler to ship them a bunch of LV bags at cost, then resell them at less than published retail prices. It's pretty likely that anyone selling these items below retail either obtained a bunch that "fell off a truck" or is selling counterfeits.

I don't remember the vendor, but a while back there was a high end product vendor/manufacturer that requested ebay take down any and all listings related to their product, counterfit or not (and by not I mean people selling off their old non counterfit products).

and if you had read just about every other comment on this story so far, you would have noticed that there is no way for a hosting company to know whether the "notifications" are in any way legitimate. they don't know if the notifications are actually from LV. they don't know if the products LV claims are infringing actually are. they are being forced to take LV's word for it, and shut down a business based on that.

Actually, your points really aren't as valid as you may think. You can easily confirm that the notices are valid by simply contacting LV itself through publicly available information that you can get from places like their website or SEC 10-Ks or other public records. They will inform you if they, or related counsel, sent the request. In the meantime, you can certainly leave the site up if you are a provider. No one will expect you to take down the site while you are doing due diligence.

Thus only large uber-corporations will provide ISP\Web hosting with strict controls putting the Internet solely in the hands of multinationals that can afford the risk.

Freedom takes another blow and more and more of the Internet as we knew it vanishes. Soon there will be nothing left except big business and big government on the Internet... or whatever you want to call what it has become...

I'm not big on conspiracies but all these dominos falling seem a tad too corrdinated for my tastes...

Step 1: Gain control of communicationsStep 2: Commoditize communicationStep 3: Litgate liabilityStep 4: Censor in the name of controlling liabilityStep 5: Control the flow of informationStep 6: Persecute, I mean prosecute those who share 'dangerous and subversive' information

Hilter, Stalin, and Mao would be proud of the direction we are headed... The Internet was a great dream and a place for freedom. Now there are so few dominos left to fall before that dream lies dead...

I think that the verdict is entirely reasonable and that the objections voiced above are not firmly grounded in facts.

The first thing to understand is that, even for an extremely large and popular web site, the volume of plausible complaints is not especially high. Most of the complaints are genuine, at least as far as their origin. Nobody goes around and pretends to be Louis Vitton or Cisco (to cite another example from the discussion

Loius Vuitiion (or whatever the hell his name is), makes an over-priced, uber-expensive handbag, and then complains when knock-offs come around? Isn't that capitalism? I also notice that this dude and his bag of lawyers sue or jail everyone selling the stuff.

But not the guys making the stuff.

Because his handbags come out of the same Chinese factory as the knock-offs. That's why most people will never notice that they *are* knock-offs. During daylight hours, the factory produces legitimate "on the books" merchandise, and then the night shift takes over, making the exact same stuff, but "off the books", which are then sold cheap, and shipped off to the rest of the world.

Legitimate copyright holder screams bloody murder, and sues and jails everyone, except the factory, who have already made their profit by selling the knock-offs to the distribution channel. And the guy can't sue or jail the factory in China, because during the day, they make his "real" merchandise.

The Chinese have figured out capitalism pretty well for a communist country. They've got capitalsim down better than the USA, that's for sure.

Noticing how many posts are from people making references to the DMCA, despite this case being about a trademark, shows to me that the 'intellectual property' campaign to confuse people and treat information like property, and to blur the difference between patents, trademarks, and copyrights, is having success and is helping destroy society.

The Hitchhiker's Guide To The Galaxy has a few things to say on the subject of Hand Bags. . .

"A handbag, it says, is the most massively useful thing an intergalactic hitchhiker can have. [Insert witty Adams-isms about the usefulness of hand bags here.] [. ..] thus leading to The Great Counterfeit Hand Bag Crisis of the early twenty-first century. The judges, lawyers and general rif-raf of the legal profession as it happened all had wives who were partial to their expensive accessories and none too pleased to see cheap knock-offs of their own fashionable handbags being carried about by simply EVERY other woman on the street. As such, the wives exerted their collective will toward the task of making their husbands entirely miserable until something was done about this altogether offensive state of affairs. Now, as is well recognized that the collective might of any large group of truly unhappy women is approximately equal in its force upon a planetary culture as a prolonged, large-scale military engagement, it was not long before the crime of hand bag counterfeiting was elevated to the very top of the list of humanity's most heinous mis-doings, right up there with the really bad stuff, --like listening to music without a license, and forcing children to make handbags and other fashion accessories in musty sweat-shops. Indeed, handbag counterfeiting and listening to music without a license were swiftly and severely punished leading to the establishment of a planet-wide police state. And while sweat-shop labor received somewhat less attention, it was nonetheless strongly frowned upon; people would shuffle while looking at their shoes and utter things like, "Oh, yes, well that's simply terrible, that is! Simple terrible." Indeed, it was considered altogether so terrible that it was often considered wise to simply not mention it at all, particularly when attending those swank gatherings where the finest handbags were on display."

I work for a hosting company and just so happen to deal with these legal matters on a daily basis.

The only time I take down a site that "supposedly" is infringing on a copyright is if I have a court order
forcing me to do so.

I get tons of emails, phone calls and letters from lawyers telling me I have to shut down website xyz.com
because they "may" be infringing on their clients copyrights.

Kiss my ass!!! How do I know your client isn't infringing on my clients copyright???
How do I know you're not some asshat competitor trying to get the site shut down???

Point being, is that if the judge ordered them to shut down the site and they didn't then yes, they
are liable. But if there is no court order enforcing this, then they can appeal and most likely
overturn that case.

That's fine if you are some small time operation with 1 tennantand you have the time to NOSE INTO YOUR TENANTS BUSINESS. Otherwise,it's going to be an unrealistic burden. IOW, you have a bunch ofstupid slobs that can't manage to get out of jury duty trying todetermine what's reasonable for a business.

The problem with "they should have known" is that you've got abunch of clueless vindictive losers making the determination.

I get the distinction, but businesses "get informed" all the time about all manner of stuff, much of it bogus. If all it takes to establish liability is for the plaintiff to send me an email claiming something that sets the bar pretty low. How much investigation would the court recognize as appropriate? What if I investigate and I determine that the accusation is without merit and they sue anyway? Do I have to investigate every complaint no matter how ridiculous and no matter the cost, to establish that I d

Despite the belief of Slashdot, most companies don't get to the point of a $32 million dollar lawsuit without trying some fairly rigorous steps to prevent getting to that point. Nor do judges tend to make decisions about "should have known" without at least "some" evidence that this was the case. Hell no one has even tried this one against a file sharer or torrent site, and I'm sure some lawyers thought about it.

The premise for cases like this is that deliberate ignorance is not a defense. You can't do a ho

I dont disagree but I was expressing concern as to what constituted "deliberate ignorance". Obviously the prosecution and defense will differ wildly on what rises to the level of "deliberate" and "complicit". Claiming a service provider that implicitly enables a crime *might* be a steep slippery slope. Do we go after the software vendor that supplied the shopping cart service? How about Firefox for not blocking the site? How about Visa and Mastercard for processing the payments? Comcast for not blocking the

I do not live in US and I could not care less but here [wikipedia.org] it says that the public prosecutor can chose whether federal or state law applies and that under the first it can even confiscate property used for drugs production even if owners did not know about such activity taking place. This looked odd to me that such practice could be possible but that does not surprised me at all - I know it from my country that drug laws are strange.

The government promised to clean up it's "seize everything!" act back in 2000, I don't know how effective it was (seizing stuff was a good source of income - I heard of cases of large buildings being seized just because drug paraphernalia was present, not even drugs). http://www.fear.org/ [fear.org] is a website dedicated to this stuff.

Until recently he would also have to prove in court that he knew nothing about what it was being used for. It's kinda hard to prove a negative so there were plenty of cases of (eg.) people renting out big boats only to have the government seize them because the renter used them to transport drugs.

>Any judge would hold same brick and mortar selling counterfeit to same liability in damages.
So if I rent some premises to a shop and they then sell dodgy goods, I'm liable? Are you sure? Sounds bogus to me.

We believe your customer, Mr David Jones, is using your paints to create signs which violate our trademarks. You are to cease and dissist from providing him with such paints or we will sue you for contributory infringement.

Actually, reading through the actual jury ruling [scribd.com] (sorry, scribd is the best I can find), jury question #12 explicitly asks:

Did Defendants prove by a preponderance of evidence that they are service provides [sic] who acted in a manner that entitles Defendants to the "safe harbor" provisions of the Digital Millennium Copyright Act?

the jury answered "no" for all three parties, including the service provider. They considered the DMCA and rejected that defense.

It looks to me like this is a lot of people getting upset over nothing; to the best I can tell (without access to other court documents), the host blatantly ignored DMCA-like steps to mitigate the situation, acted willfully to support the copyright infringers, and got financial compensation for doing so. Justice was served.